The recent discovery of nitric oxide (NO) and the elucidation of its biological roles has been accompanied by significant advances in our understanding of several physiological and pathological processes. Impaired NO synthesis and/or release may underlie the pathophysiology of several cardiopulmonary disorders characterised by hypoxemia and pulmonary hypertension. Inhaled NO produces selective pulmonary vasodilation and appears to be an effective new therapy for infants with pulmonary vasospasm or hypoxemia associated with ventilation-perfusion imbalance. Although formal reports from current randomised and controlled clinical trials of inhaled NO therapy are awaited, preliminary results suggest an improved outcome. NO is, however, still an investigational drug. The limitations of this therapy and its toxicology are reviewed.